Italy's Bank Chief Says Country Will Experience Recession In 2012

ROME (AP) — Italy's central bank chief is confirming that 2012 will be a "year of recession" for his country but says 2013 will see a "return to growth."

Bank of Italy governor Ignazio Visco also says Italian banks are "sound" even though the outlook for profit recovery for them this year is "not good."

The new central bank chief says in a speech in Parma, Italy, that in line with forecasts by the bank last month, Italy should see a 1.5 percent decline this year in gross domestic product. Visco predicts a "return to growth next year."

He said Saturday Italy's banking system, in terms of capital adequacy, is "extremely sound." Visco also says investor uncertainty about Italian government securities has "eased" but not yet disappeared.

Comments

[castlemike]

11:03 PM on 02/19/2012

http://www.zerohedge.com/news/ecb-has-opened-pandora%E2%80%99s-box

The ECB, on its own and without judicial or parliamentary review, has swapped their Greek debt for new Greek debt that is not subject to any “collective action clause.”

They did this unilaterally and without the consent of any other sovereign debt bond owners of Greek debt.

They did this without objection of any nation in Europe.

They have retroactively changed the indenture, the contract made by Greece with all of the buyers of their bonds, when the debt was issued.

There is no speculation involved in these statements, there is no longer any guesswork on what might be; the ECB swapped their bonds for new Greek bonds with the assent of the Greek government and it is now a done deal.

If they can exempt themselves from a “collective action clause” then they can exempt themselves from any clause, in any sovereign indenture, for any European country.

The fact that they are now clearly senior to any other bond holder, or more aptly put, that any private bond owner is now subordinated to the ECB is one consideration but hardly the most important one.

The incredibly grim reality now is that any European and all European sovereign debt can have their indentures changed by the ECB when it is to their advantage.

The “Rule of Law” has been abrogated and tossed aside in the name of political contrivance.

[Addicted2Italy]

07:30 PM on 02/19/2012

I think Italy will have some tough economic times for the next few years. Gas prices are soaring, there are strikes that cripple the transportation sector almost every month, the Euro has not lived up to the average working person's expectation. They lose purchasing power every month. I'm hoping they can pull out of it with the right leadership, but with Monti the jury is still out.

[IgnoranceIsStrength]

07:05 PM on 02/19/2012

While Greece and Europe continue sinking ever deeper into the colonial quicksand of Pax Goldmania, Iceland, which blew up, pushed its banks into bankruptcy, and arrested its corrupt bankers, is well on its way to being the world's only normal country.

ICELAND RATINGS RAISED TO INVESTMENT GRADE BY FITCH
FITCH UPGRADES ICELAND TO 'BBB-'; STABLE OUTLOOK
FITCH DOES NOT EXPECT ICELAND TO SLIP BACK INTO RECESSION
FITCH SAYS ICELAND GOVERNMENT DEBT PEAKED AT 100% OF GDP IN '11

Too bad the Goldman colony of Greece (and soon everyone else - thank you first lien "bailout" debt) will not see headlines such as these written about it any time in the next century.

Just to make it clear Iceland did not default on anything. What they did is to allow private companies to fail and refuse to completely socialise the losses (there was some intervention by the State). Capitalism without bankruptcies is like Chrisitanity without Hell, it just does not work!

[AgainstAnimalAbuse]

05:21 PM on 02/19/2012

Italians have know that for a while, they didn't need bankers to make the announcement. The austerity program has reached a new high with Monti saying no to the 2012 summer Olympics in Rome and the mayor of Rome blasting him for it. Monti is becoming very unpopular, the price of gas is the highest it has been and home ownership has been levied an additional tax irrespective of worth which means whether you own a mansion or a 2-bedroom house you pay the same additional "tax" per house, but parliament members have not seen their pay or benefits reduced because Monti needs their support, while the people who did not elect him, because he was appointed pro tempore to finish Berlusconi's term until the next election in Feb. 2013, have the screws put to them by way of taxes and reduction in benefits every which way.

[frank day]

12:31 PM on 02/19/2012

Italian bond yield was nearly 6% this week !!

[taurus58]

04:08 PM on 02/19/2012

have you heard of the latest eye popping fraud Frank.....unbelievable
http://www.msnbc.msn.com/id/46428102/ns/business-world_business/t/italian-police-seize-trillion-fake-t-bonds/#.Tz6RDFGBv2R

[frank day]

08:59 PM on 02/19/2012

Holy smokes!!! That's a lot of dough.

[wsdave]

02:47 AM on 02/19/2012

We all fall down...

[Kenz300]

12:45 PM on 02/18/2012

The whole world is making an adjustment to the economic crisis. Individuals, business and governments all need to become more responsible.

Every country needs to develop a plan to balance population, resources and jobs.

[ruolivert]

11:45 AM on 02/19/2012

Responsibilty doesn't fit well with a consumption driven economy. Responsibilty implies paying down debt and saving money but when central bankers keep interest rates very low and flood the world with cheap capital they discourage savings and encourage debt. Of course the opposite of this is austerity which isn't exactly a walk in the park either